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Use of AR and VR in the Marketing Mix in the Scope of Industry 4.0 Digital Transformation

Industry 4.0 and Digital Transformation

Industry 4.0 and Digital Transformation have recently become one of the most discussed topics, especially in academic circles. The prevalence of this discussion is undoubtedly due to the fact that it is practically observable. Especially the acceleration of technological development in recent years and the rapid adaptation to this change push researchers to work in this direction. However, although the Digital Transformation process rapidly changes the economy and social system, it is not possible to say that this change is fully understood by both academic circles and manufacturers preparing for transformation. In the literature review, it was seen that academic resources are limited. Every work done in this field is of great importance for today, which may be defined as the beginning of the era. Although there are still limited and narrow approaches, the study conducted by Aylin Çalışkan et al. is important in terms of approaching the issue in the context of marketing and is the main source for this article.

Not only the studies in the academic field, but also every step taken by the companies that are the pioneers of transformation will undoubtedly shape the future. In this context, the aim of this article is to provide general information about Industry 4.0 and Digital Transformation, by making use of academic resources, and to contribute to the creation of a roadmap by informing manufacturers and businesses who want to make Digital Transformation in their marketing strategies and want to have information about the subject. This article examines the relationship between Digital Transformation and Marketing.

What is Industry 4.0?

In order to understand the 4th Industrial Revolution, first of all, it is necessary to understand what is meant by the Industrial Revolution and to look at what the previous revolutions were. The term industrial revolution refers to the technological change of the economic and social system in industry. In particular, this expression finds its place in focusing on the situation of the job, the change in living conditions and economic wealth (Akben, 2018).

First Industrial Revolution In the middle of the 18th century, it first started in England and continued in the USA, and then European countries such as Germany were involved in the transition from agricultural society to industrial society. Small businesses that took advantage of the industrial revolution turned into large factories, so large factories equipped with machines created the first industrial wave (Dombrowsi and Wagner, 2014)

The 2nd Industrial Revolution, which was pioneered by Germany and included the USA, coincides with the end of the 19th century. With the use of electricity, it came to life in the chemical, petroleum, plastic and steel sectors. In this period, production models such as line-to-line production line were made in production (Tunzelmann, 2003).

As a result of the developments in information, communication technologies, biotechnology and nanotechnology, the process that is defined as the 3rd Industrial Revolution and which we dominate because it coincided with the end of the 20th century, has begun (Dombrowsi and Wagner, 2014; Tunzelmann, 2003).

The concept of Industry 4.0 was first introduced at the Hannover Technology Fair in Hannover, Germany in 2011 and was soon incorporated into the production process in the USA and Western European countries (Zhou et al., 2015). The main difference of Industry 4.0 from other industrial revolutions is that it connects people, machines and objects to increase production efficiency while involving customers in all processes (Bettiol et al., 2017).

What is Digital Transformation?

First of all, Digital Transformation is the holistic transformation carried out by organizations in human, business processes and technology elements in order to provide more effective and efficient service and to ensure beneficiary satisfaction, in line with the opportunities offered by rapidly developing information and communication technologies and changing social needs. Of course, it is not possible to reduce this process to a few technologies. In fact, it is an endless adaptation process with every developing technology. In its simplest form, it is necessary to think of digital transformation as follows: Even executing the bureaucratic process with a petition is now a part of digital transformation. Industry 4.0, which is attributed to the fourth industrial revolution, has the vision to build smart factories using smart virtual-physical systems (Akben, 2018). Industry 4.0 briefly covers cyber security, cyber-physical systems, cloud technologies, smart factories, internet of things, internet services, learning robots, big data, virtual reality and 3D printing technologies (Hermann, Pentek, & Otto, 2015). By looking at the coverage area, it may be difficult to grasp which business units will move to these areas today. However, perhaps it would be correct to define it as a virtualization process.

So why does Digital Transformation stand at such an important point? Because the competitiveness of manufacturing enterprises in local and global markets is important for economies based on the private sector. With the changing conditions in the world and in Turkey, “industrialization” has ceased to be the main objective and now it has become the main objective to increase “competitiveness” (Çağlar, 2006, 307). Undoubtedly, companies that have completed their Digital Transformation will become more active in the national and international market. Digital Transformation processes differ for each company. Digital maturity, a measure of an organization’s ability to create value through digital, is a key indicator of success for companies embarking on digital transformation.

What is Marketing Mix and 7P?

Although Industry 4.0 is generally thought of as production-oriented, it actually has a structure that affects all processes of the business. Marketing strategies are as important as production in order to reduce production costs for companies, increase flexibility and increase the quality of relations with customers (Çalışkan, 2020).

The conceptualization of the marketing mix concept as a marketing model was made by E. Jerome McCarthy in the 1960s. McCarthy (1960) stated that modern marketing strategies should be based on the 4Ps of marketing, product, price, promotion and place. Booms and Bitner (1981) argued that 4Ps may apply to goods, but the same elements will fall short for services and may not be valid at times due to the unique characteristics of services. Therefore, Booms and Bitner’s (1981) study came up with a new idea such as 7Ps: product, price, promotion, place, physical environment, process and people (participants) because mixed elements may be appropriate for service marketing.

Using AR, VR and 3D in Digital Transformation in Marketing Mix

One of the most important steps to be taken is to equalize the market area with the efficiency of marketing activities and easily accessible social communication channels by monitoring real-time data in today’s world where competition is increasing with the developing technology. The use of AR, VR and 3D is of great importance for competitive advantage in integrating the marketing mix with the Industry 4.0 approach.

The product, which is one of the components of the marketing mix, is the first thing that comes to mind in this integration. The augmented reality function allows customer participation while the product is still in the design phase. With AR, products can be personalized or modified. In addition, products can be visualized in real time via AR.

From the perspective of the promotion mix, we can observe through current examples that Industry 4.0 elements such as virtualization and search engine optimization tools have led to the transformation of traditional promotional practices such as personal selling, direct marketing and advertising (Shkurupska and Litovchenko , 2016). Marketing and advertising, which used to be a one-way message to the customer, has been replaced by examining customer behaviors and guiding promotional activities accordingly.

Process: Tools that enable the optimization and automation of business processes stand out in the process element of the marketing mix. Customer experience is highly correlated with the product or service delivery process (Aaker, 2008). AR and virtualization have a key role in improving the customer experience (Çalışkan, 2020). With the use of AR, consumers can see the content of the product they are interested in and try the products digitally. AR and virtualization are one of the most common Industry 4.0 integrations used today to facilitate and support customers’ online shopping experience. Thanks to Industry 4.0, highly automated processes improve the quality of products and services, show that the goal of “zero defect” can be achieved and customer satisfaction can increase (Eleftheriadis and Myklebust, 2016).

When considering the human element of digitalization and the marketing mix, it would be appropriate to talk about “virtual assistants” (Çalışkan, 2020). It is one of the tools that uses AR instead of a salesperson; This gives a 360-degree virtual view of product lines and details and provides more information for eventual decision making (Smart Insights, 2019) In this way, the retailer keeps the customer experience level high, provides personal assistance and takes advantage of minimal sales staff costs.

We examined it in terms of creating some ideas about how AR can be used in some elements of the marketing mix in Industry 4.0 digital transformation. However, since we are at the beginning of the process, it is not possible to talk about a mathematical equation about how this transformation will be possible. In fact, every company has the feature of being the pioneer of the process. The roadmaps that companies that want to initiate their Digital Transformation and reach Digital Maturity will meet with the providers of these services and draw up their own transformations, and how these technologies can be used provide new concepts and approaches to digital transformation. New technologies, which are components of Industry 4.0, are undoubtedly the most important milestones in making a world we dreamed of in the past a reality. In this direction, the digital transformation adventures of companies will be directly proportional to their imagination.

Finally, with the Industry 4.0 digital transformation, companies have started to produce more customer-oriented and value-added results in their marketing efforts. We see that marketing management and practices have been rapidly digitized in recent years, triggered by the good customer feedback and efficient processes provided by the company. According to the case analysis results of the study conducted by Aylin Çalışkan et al., associating marketing that focuses on customer value with Industry 4.0, which deals with production process value, and reinforcing both will contribute to companies gaining competitive advantage.

Bibliography

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Dombrowsi, U., ve Wagner, T. (2014). Mental strain as field of action in the 4th industrial revolution. Variety Management in Manufacturing. Proceedia CIRP. 17, 100-105.

Tunzelmann, N. V. (2003). Historical coevolution of governance and technology in the industrial

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Akben, İ., & Avşar, İ. İ. (2018, April). ENDÜSTRİ 4.0 ve Karanlık Üretim: Genel Bir Bakış- HKU. DergiPark. Retrieved January 16, 2022, from http://tursbad.hku.edu.tr/en/download/article-file/465518

Çağlar, E. (2006). Türkiye‟de Yerelleşme ve Rekabet Gücü: Kümelenmeye Dayalı Politikalar ve Organize

Hermann, M., Pentek, T., ve Otto, B. (2015). Design Principles for Industrie 4.0 Scenarios: A Literature Review. Technische Universität Dortmund. DOI: 10.13140/RG.2.2.29269.22248

Digital Maturity. BCG Global. (n.d.). Retrieved January 16, 2022, from https://www.bcg.com/capabilities/digital-technology-data/digital-maturity

Eleftheriadis, R.J. and Myklebust, O. (2016), “A quality pathway to digitalization in manufacturing thru zero defect manufacturing practices”, 6th International Workshop of Advanced Manufacturing and Automation, Atlantis Press.

Aaker, D.A. (2008), Strategic Market Management, 1st ed., John Wiley & Sons, New York.

Shkurupska, I. and Litovchenko, I. (2016), “The development of marketing communications under the influence of the Industry 4.0”, International Scientific Conference Industry 4.0, Vol. 2 No. 1, pp. 103-106.

McCarthy, E.J. (1960), “Basic marketing: a managerial approach”, in Richard, D. (Ed.), McCarthy Basic Marketing: A Managerial Approach, Irwin, Homewood, IL.

Booms, B.H. and Bitner, M.J. (1981), “Marketing strategies and organization structures for services firms”, in Donnelly, J. and George, W. (Eds), Marketing of Services, American Marketing, Chicago, pp. 47-51.

Smart Insights (2019), “5 ways to use Augmented Reality in your marketing strategy”, available at: https://www.smartinsights.com/digital-marketing-platforms/augmented-reality/5-ways-to-use- augmented-reality-in-your-marketing-strategy/ (accessed 15 July 2019).

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